The Federal Government Walks the Walk

Three new federal methane rules should help encourage the adoption of these technologies.

First, the Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) will soon finalize a rule that would require gas pipeline operators to survey their systems and repair all gas leaks.

Second, the EPA finalized the “Quad-O” standards in December, which require stricter methane leak monitoring and repair for gas wells, processing plants, compressor stations and storage facilities. The rules lean on new technologies by allowing third parties (e.g., environmental groups) to notify the EPA of major leaks, versus relying on operators to self-report.

And, instead of requiring a human to walk around sites to manually detect leaks, technology such as continuous monitoring sensors can now be used for the first time. This is a big deal as companies will only adopt new technologies when they know they can be used for compliance.

Finally, in January, the EPA proposed the Waste Emissions Charge, a provision of the Inflation Reduction Act (IRA). It would impose a significant fee of $900 per ton of leaked methane, rising to $1,500 per ton by 2026.

Three important caveats: the charge does not apply to gas distribution (e.g., your local gas utility), it only covers large facilities (~70% of leak volume), and only takes effect if facilities don’t comply with the new Quad-O rules.

Together, these policies are still expected to reduce 2030 emissions by >150 million metric tons of Co2 equivalent, more than the annual emissions from 33 million gasoline-powered cars.

 

States Aren’t Off the Hook

States will be an important backstop if a second Trump Administration attempts to roll back the new EPA rules as expected. That means they need to pick up where the federal rules stop.

Several oil and gas producing states, including New Mexico and Colorado, now limit routine venting and flaring. New York, with limited in-state oil and gas production of its own, updated its greenhouse gas inventory to include out-of-state methane emissions associated with in-state fossil fuel consumption.

New York also accounts for pollutants over a 20-year lifetime, giving utilities a clear incentive to eliminate leaks on their system, and to buy gas only from producers that eliminate methane across their supply chain. Recent utility pilots will follow a certification process aligned with best practices outlined by the Environmental Defense Fund to avoid greenwashing.

Air regulators and environmental agencies in other states should follow New York’s example. Today, states like Maryland and Michigan either ignore upstream emissions entirely, or forbid utilities from taking environmental benefits into account when procuring gas. That’s a mistake.

States and commissions should also encourage utilities to adopt new technologies that will generate the data needed to decide whether it’s more cost effective to eliminate methane leaks in a given situation or consider alternative pathways, such as completely electrifying a portion of the gas system.

In the end, we have to come to grips with the fact that large portions of the gas system will likely be with us for decades to come and make informed decisions on how to reduce its worst climate impacts today. This will require us to measure, baseline, and make a plan to reduce methane leaks or pursue reasonable alternatives.